Archive for the ‘worksite Long Term Care’ Category

Sun Life Finance entitled their latest pulse poll “Shut Your Eyes and Hope for the Best”, after it found that only 36% of respondents think they will need long term care in their lifetime. In reality, about 70% of Americans over age 65 will need long term care at some point.

The study’s commentary states that “many Americans harbor a discomfort with aging and mortality, and experience wishful thinking about their chances of living independently in their final years. This mix of dread and hope has led to a counterproductive paralysis about long term care planning”. The study also found that most respondents “fail to grasp the scale of rising nursing home costs”.

Importantly, however, the study also finds that even with that sense of dread, people age 50 and older are both very aware and concerned about paying for long term care. The survey found that 57% of this group is worried about financing long term care, including affluent respondents.

Not surprisingly the worry about long term care increases as people approach age 65, particularly for those who are single.

University of Tennessee’s announced this week that their highly regarded Women’s Basketball Coach, Pat Summitt, has been diagnosed with Alzheimer’s disease. She’s only 59.

Ms. Summitt is a paragon of fitness and sports. Her team has amassed over 1,000 victories and nine national championships. She is now the face of younger people living with Alzheimer’s.

Over 200,000 people in the United States living with Alzheimer’s are under the age of 65. Alzheimer’s is one of the leading diseases requiring long term care support.And one of the most expensive.

When employers think of long term care, they often think of retirement and the elderly. However, long term care needs can begin early from disease as in Ms. Summitt’s case, an auto or sports accident, or another type of diagnosis.

The need for long term care insurance is growing in this country as nursing home and assisted living care costs reach toward $100,000 annually.

Few of us can afford that without wiping out savings, and perhaps even losing our home.

This is why employers need to rethink their benefit portfolio to include long term care insurance option for employees.

With the rapid rise in long term care costs, a need among younger employees, and potential changes to Medicare and Medicaid in Congress, employers will need to fill the gap.

The findings were released as part of the American Association of Long-Term Care Insurance 2011 LTC Sourcebook.

The states with the highest percentage of LTC insurance policy holders include California, New York, Texas, Florida and Illinois. Pennsylvania and Missouri were the only states to experience a decline.

“This tells us that awareness and interest in LTC is growing rapidly,” said Doug Ross, President of EM-Power. “and will likely translate into more employees asking their worksite about LTC benefits.”

When I meet with employers I always ask them when they think their employees would get around to thinking about planning for long-term care if they didn’t offer it as an employee benefit. Typical answers are “never”, “when they get closer to retirement age”, or “when something happens to them”. Unfortunately, those are all correct answers and they don’t bode well for the financial security of their employees as they age.

This leads us to 3 Reasons Employers Should Offer Long Term Care Insurance:

1. Employees Do Not Understand the Long Term Care Issue

Unlike traditional benefits that are generally understood by most employees, there are many misconceptions about long-term care. So while many companies provide generous sponsored savings programs, health insurance and other benefits to help their people build a safety net, working age people tend to think of old people, senior citizens or nursing homes when they hear the words long-term care.

Here are some things that people don’t understand:

That nearly 70% of people who reach age 65 will need long-term care during their lifetime

That the cost of care can be as high as $100,000 per year

That long-term care is not covered by traditional health insurance or Medicare when you reach age 65

That if you have resources, you will need to pay for your own care

Despite the number of people living through these situations with their parents and grandparents, many people are not aware that there is a planning solution. Education for employees at a young (or older) age is a tremendous benefit that employees appreciate whether they purchase protection or not.

2. Many Applicant’s Are Denied Coverage Due to Pre-Existing Medical Issues

As we age the likelihood of developing a chronic or catastrophic illness or injury increases. Purchasing coverage when you are younger and likely healthier can ensure that you are able to put protection in place before you have the need. Employees who are not educated about long term care insurance may not begin to address the issue until it is too late.

People can actually get approved for coverage with common medical conditions like arthritis, diabetes and high blood pressure, but what generally happens with those types of conditions? They generally worsen over time. The result is that when many people finally get around to applying for Long Term Care insurance its too late. Their medical issues have escalated to a point where they are uninsurable. Industry wide approximately 25% of all people applying for long-term care insurance are declined due to pre-existing medical conditions.

3. Offering Coverage is the Right Thing To Do

If one of you’re employees was about to put themselves in a dangerous position you would warn them if you could, right? The reality is that with 70% of people who reach age 65 needing Long Term Care, and annual costs of $100,000+, failing to at least be educated on the subject is akin to being in a dangerous position.

As an employer you are in a position to ensure that at the minimum you’re employees have addressed the issue. It can be done without costing the company anything and it has the potential to save many of their employees from tremendous financial and emotional pain. Education for employees helps them understand the problem and take action 5, 10 and even 20 or 30 years before they would have thought about. For many employees, this will be the difference between being medically underwritten (before pre-existing conditions worsen) and in every situation, age based premiums will be the lowest they will ever be.

There is a catch

While there doesn’t need to be a cost to implement a worksite long-term care benefit, there does need to be a willingness and commitment to get educate employees. The Goal is not that the employees will purchase coverage, but rather, they stake the time to learn about the issue.

Three benefits of Offering Group Long Term Care are:

1. Education – for both the employer and the employees.

2. Premium discounts on the same coverage they employees would purchase outside an employer sponsored plan

3. Simplified medical underwriting – This allows many who might not qualify individually to secure coverage.

You’ve heard the saying before, “you can bring a horse to water, but you can’t make it drink”. Employers offering coverage provide every opportunity for employees to take control over their financial security despite the fact they don’t yet know enough to ask for it.

Why do you think less than 1/5 of 1% of businesses with under 1,000 employees offer long-term care insurance while 49% of businesses with 5,000 or more have implemented sponsored benefit programs?

What do these larger companies know that the smaller companies don’t? Do they care more about their employees? Are small business owners mean? Could it be that larger companies work with benefit consultants that have taken the time to educate their clients on the importance of long-term care planning?

Long-term care is the most misunderstood of all insurance products. Ask random working age people what comes to mind first when they hear the words “long-term care”? You’re likely to hear things like “old people”, “nursing homes” or “something their parents need”. You can understand the confusion. Many baby boomers got married older than their parents, and with young children long-term care is not top of mind.

With that as background, now lets add the CLASS Act to the mix, a legacy program from Ted Kennedy. Without getting into politics I will give the benefit of the doubt to Washington and say it is a well intentioned piece of legislation that was not completely thought out and is burdened by a poor design. According to actuarial experts within and outside of government the CLASS Act creates a situation with adverse selection. In other words, people with pre-existing medical conditions will be more apt to apply for coverage than healthy individuals which will cause the program to become unsustainable. Private insurance, which requires limited underwriting is projected to be less expensive.

There are two important benefits of the CLASS Act that I’ve discussed in previous blog posts. First, the CLASS Act will raise awareness of long-term care with a conversation on the national stage. The second huge benefit of the CLASS Act is that all employees earning enough income to qualify for Social Security (about $1,100) will be eligible for coverage regardless of pre-existing health issues.

So why is now the right time to start a conversation about long-term care with clients and prospects?

Employer will need to decide whether to participate in the CLASS Act and that decision will have consequences for business owners, executives and employees.

Opening a conversation with the CLASS Act will differentiate advisors by providing much needed information.

Private coverage requires some underwriting so employees applying now will lock in insurability and the lowest rates that are tied to your age at application

Once CLASS Act coverage is available you can always change to it if it turns out to be better that private insurance.

Over the next year someone is going to start the long term care discussion with your clients or companies that are your prospects. Shouldn’t that person be you?

Our new White Paper “The CLASS Act: What it means to brokers, employers, and the nation” is available to help you start the conversation. Download a sample copy and contact Doug Ross at 800-483-1115 or by email to see about adding your logo to the guide.

The Community Living Assistance Services and Supports Act — more commonly known as the CLASS Act — is part of the Patient Protection and Affordable Care Act, the healthcare reform legislation signed into law on March 23, 2010. The new legislation creates a national voluntary program to defray some of the costs associated with long-term care for working Americans.

The CLASS Act addresses challenging problems brought about by an aging population — problems that tear at the very fiber of American society. As more Americans become working caregivers, one study estimates that lost productivity will cost businesses $33.6 billion. Another study estimates that healthcare costs eight percent more for working caregivers than for employees without caregiving responsibilities.

Although employers are encouraged to offer CLASS Act coverage, they are not required to do so. In companies that choose to participate, employers will automatically enroll their people unless they specifically opt-out.

Significant concerns have been voiced about the CLASS Act by actuarial experts both from within and outside of government. One concern is the potential for what the insurance industry calls adverse selection. The legislation requires pricing to ensure solvency over a 75-year period but must accept all employees over age 18 who meet a minimum ‘at work standard’ regardless of pre-existing medical issues. As higher pricing limits participation, a disproportionate number of people with pre-existing health issues will enroll.

Other concerns are the cost of subsidizing rates for the poor and the young, a ‘one-size-fits-all’ design that will cover only a minimal level of the expenses associated with long-term care, the exclusion of non-working family members, and the absence of protection against future premium increases. In fact, there are concerns that the cost of coverage may actually be more expensive than private insurance.

One of the benefits of the new law is that it gives employers a unique opportunity to protect their own productivity by educating their people on a problem that has been quietly — but rapidly — growing: the combination of an aging population and the rising costs connected with long-term care issues. It will also help their people avoid the financial pain and even devastation that can accompany the need for long-term care.

Long-term care has the potential to affect both a company’s productivity and the financial well being of its employees, and employers will be required to decide whether or not to participate in the program.

So what does CLASS Act mean for businesses?

Our new White Paper “The Class Act: What it means to employers, their employees, and the nation” addresses questions and concerns about the CLASS Act and is available as a free download. To get your copy:

Nobody wants it…It’s too expensive…I tried it and the results were horrible…The last thing I want to do is jeopardize my existing business.

Who would say these things, and what do you think they are talking about? Answer: Benefit brokers talking about employer-sponsored long term care insurance.

Perception is reality. Understanding why benefit brokers feel this way about long term care insurance could move us toward helping millions of American employees solve a planning problem—one with devastating consequences most are not even thinking about.

With the CLASS Act scheduled to become effective January 1, 2011, every employer will be required to make decisions regarding long term care insurance. If private insurance is going to be part of the solution to the long term care crisis, benefit brokers need to be part of it. They have relationships and access to key decision-makers, which is the beginning of the sales process.

It Hasn’t Been Done RightImagine playing table tennis with a tennis racquet. Assume all the rules of table tennis are the same except you need to hit the little ball with a tennis racquet. What’s the problem? Table tennis and tennis both have the word tennis in them and they both require you to hit a ball over a net with a racquet. Try this yourself and it will become painfully obvious you are at a disadvantage with the tennis racquet.

Well, selling long term care insurance and health insurance are both selling insurance, aren’t they? Yes, but there are differences, and those differences go a long way to explaining the results benefit brokers have experienced.

Let’s consider a few differences. Human resources executives know what health insurance is and they go through an analytical process of comparing premiums and features when making purchase decisions. There is no emotional involvement and there is a deadline for a decision. Long term care, on the other hand, is not understood, and it requires people to think about things they would rather avoid. You don’t really need to make a decision since you can do it any time. Long term care is way off in the future and it probably isn’t going to happen to you anyway, right? It’s probably something your parents should be thinking about.

Selling a product people don’t understand and don’t want requires a different sales approach. Salespeople need to be up to the task of asking personal, probing questions to get decision-makers emotionally engaged.

Start with Education
Education drives success in long term care, and benefit brokers need to change from analytical sales techniques that work for their other lines to techniques that engage prospects emotionally. Rather than selling, you are guiding companies through an issue that can profoundly impact the people responsible for their business success. A concerted effort is required, and it will differentiate the broker who does it well.

The most common mistake brokers make with LTC insurance is delivering a proposal before a prospect understands the issue and connects emotionally. Rare is an executive level meeting where there isn’t a participant with his own story to share.

Employer presentations must engage prospects to talk about their own experiences, how they feel about their employees, and how they came to offer the benefits in their package.

Asking questions is the key as employers share their business philosophy about recruiting, rewarding and retaining top people. Providing education on the limitations of traditional health insurance, Medicare and disability insurance after talking about their own benefit package helps employers connect the dots to see the hole in the safety net.

CLASS Versus Private Insurance
The first decision for employers is whether to participate in the CLASS Act. Suffice it to say, there are a lot of negatives about CLASS, according to both government and private experts.

CLASS is a one-size-fits-all program with a nominal benefit, projected to be more expensive than private insurance due to adverse selection. Private insurance, on the other hand, has limited underwriting to screen out those with significant medical conditions to control cost. Offering private insurance now locks in medical insurability and the least expensive age-based rates.

When CLASS does become available, policyholders can evaluate their private coverage from a position of strength and make decisions in their own best interest.

There will be a lot of press on CLASS, and benefit brokers need to start dripping information to their clients and prospects now, so that when it becomes available they don’t accept it at face value without considering coverage in the private market.

Voluntary Versus Employer-Paid
Private long term care insurance benefit programs with underwriting concessions and discounted premiums can be implemented without cost to employers. And that is how to begin the conversation. After all, how many companies today are looking to spend more money on benefits?

With that said, once employers have been engaged on the issue and see the minimum contribution required to lock in discounts and the most favorable underwriting, many choose to contribute toward coverage. In some cases, however, there really is no budget, and that doesn’t mean brokers can’t provide value to clients and themselves if the program is sold properly.

Commitment Starts at the Top
Voluntary long term care insurance enrollments offer tremendous benefits for employers and their employees; education at an early age, underwriting concessions that help people with pre-existing health issues get approved for coverage and premium discounts. Without buy-in from the top, however, it is difficult to get the level of cooperation needed to deliver maximum value. The primary success factor in implementing a long term care insurance benefit is the ability to get in front of employees with education. Buy-in at the top provides the commitment necessary for communications strategies, workshops, and one-on-one follow-up meetings during work hours needed for success.

Different Profit Model
A discussion of long term care insurance would not be complete without talking about compensation. I’ve had brokers who introduced us to their clients for a commission split say that even if they received 100 percent of the commission, long term care does not generate enough income to make it worth their time.

No doubt it is a different model. As opposed to health insurance commissions that are level each year, commissions on long term care are high in the first year and low thereafter. Yet, unlike group health products, commissions on long term care are vested and premiums are the most persistent of all insurance products. Over the course of 10 or 15 years, a significant renewal premium can be built that will pay vested commissions for as long as employees live and continue to pay premiums. The business model needs to be looked at with, pardon the expression, a “long term” view.

Opportunity Meets Need
Less than 1 percent of the 5 million employers with fewer than 1,000 employees offer coverage—thus, long term care is a wide open opportunity in the midst of a very competitive benefits marketplace.

The CLASS Act will require every employer to make decisions regarding long term care; and, as employees hear about it, they will begin asking questions. For employers, it is an opportunity to generate goodwill by demonstrating an understanding of the issue and providing informed guidance to their employees before questions begin. For benefit advisors, it’s an opportunity to create a new source of revenue and add to their value proposition.

Understanding the details of CLASS and how it compares to private insurance is the starting point for employers. As we move closer to the implementation of CLASS you can be sure someone will be calling your clients to discuss long term care. Shouldn’t that person be you?

Empower helps employers of all sizes implement long-term care insurance benefit programs in the workplace and conducts workshops & educational classes concerning LTC and the CLASS Act for employers and employees. If you would like to know more about the CLASS Act and how it might impact your company call us.

We also provide resources, training, and assistance to brokers looking to educate and help their clients with Long Term Care and understanding the CLASS Act.

Agent Sales Journal recently interviewed insurance broker Joe Imparato of Tuckley & Shepley Benefits Insurance, LTD in Boston. During the interview they asked him to identify a resource, service, software, or program that has been critical to his success. We were honored that out of all of the available tools he chose to shine a spotlight on Empower services.

Thanks Joe. Here’s the question and a link to the full article.

Q: Can you share a resource, service, program, or piece of software that has been critical to your success?

Joe I: I was terminated from TIAA-CREF, and that is where I got my start for my own business. I had great brand-name clients to start with. I worked with EM-Power to get into LTCI. I use their system for prospecting and sales. Anne and I use the EM-Power system for prospecting and sales for employer-sponsored multilife cases.

Their system includes PowerPoint presentations, a prospecting kit (binder with all HTMLs, letters), everything with the process of putting in place a multilife case. They have a software program where you can show prospects a six-minute tutorial that they can click to from my email. It is a turnkey system from when we meet with a business owner or human resources person.

We show them that we have everything that it takes to roll out the program, from the accounting bill to how employees sign up. When I sit in front of them, they’re making a carrier choice, not how are we going to do it. Every little inch is covered with this.

HR’s biggest fear is that it’s easier to do nothing than to risk introducing a new voluntary benefit. If they have an attachment to the product, we reduce their fears that administration will be painful or burdensome. We are usually chosen over their existing broker to offer LTCI because of the complete package and solution we bring to their institution.

We’re proud to have Joe and Anne as partners.

Empower helps employers of all sizes implement long-term care insurance benefit programs in the workplace and conducts workshops & educational classes concerning LTC and the CLASS Act for employers and employees. If you would like to know more about the CLASS Act and how it might impact your company call us.

We also provide resources, training, and assistance to brokers looking to educate and help their clients with Long Term Care and understanding the CLASS Act.

The CLASS Act, which goes into effect on January 1st, 2011, will impact Employers and Brokers. In this podcast Long Term Care expert Doug Ross discusses the issues and concerns.

Listen Now!

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Empower helps employers of all sizes implement long-term care insurance benefit programs in the workplace and conducts workshops & educational classes concerning LTC and the CLASS Act for employers and employees. If you would like to know more about the CLASS Act and how it might impact your company call us.

We also provide Resources, training, and assistance to brokers looking to educate and help their clients with Long Term Care and understanding the CLASS Act.